National Equipment Services increased its rental and total revenues over first quarter 2001, but increased its net loss from $8.3 million in Q1 '01 to $9.7 million in the first quarter ended March 31, 2002.
Rental revenue increased from $107.3 million to $114.5 million year over year while total revenues increased from $138.8 million to $150.4 million. However, reflecting the acquisition of Brambles, on a proforma basis, first quarter 2001 revenue was $180.3 million, with $137.6 million in rental revenue.
Still, Evanston, Ill.-based NES has realized significant benefits from its ongoing cost-reduction efforts. On a proforma basis, operating expenses decreased by $9.5 million from last year's first quarter, and $23.7 million from the fourth quarter of 2001.
"We expected that rental revenue would be down in the first quarter and we also expected a significant reduction in operating expenses, that was one of the things that we were happy to see," said CEO Kevin Rodgers. "In terms of reducing expenses, the benefits we expected have taken hold and the benefits are being realized on a proforma basis."
During the first quarter, NES funded more than $20 million for the working capital and related costs of its Brambles acquisition, as well as $13 million of fleet purchases without increasing its debt balance from year-end levels. "We feel like we are ahead of our plan to achieve a $75 million debt reduction over the next three quarters," Rodgers added. NES reduced its debt by about $100 million during 2001.
Chief operating officer Steve Shaughnessy said that the industrial rental segment has been a bright spot of the company's performance, increasing its percentage of the revenue mix from 33 to 37 percent during the quarter, with industrial rental revenues running about 4 percent higher than during the same period last year. However commercial construction ran more than 5 percent lower year over year.
Shaughnessy said that the Gulf Coast region, which was the most problematic for NES in 2001 is doing much better, partly as a result of management changes. Rental revenues from the traffic safety segment ran close to projections, about 3 to 4 percent behind last year, with first quarter rental revenue of about $8.5 million. He said the East, which was NES' strongest region last year is running about 20 percent behind plan in rental revenues, primarily because of a downturn in demand in the commercial construction sector.
No. 4 on the new RER 100, as of the end of the first quarter, NES has 228 locations in 38 states and Canada.
